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Kibosh on province's clean-energy call fuelled by logic

mhume@globeandmail.com

If humans were wired with electric circuits, a lot of fuses would have been blown last week when the British Columbia Utilities Commission rejected BC Hydro's long-term acquisition plan.

Usually, commission rulings are ignored by the public, not because they don't deal with important issues, but because they are complex regulatory matters discussed in technical terms. A relatively small number of stakeholders watch the British Columbia Utilities Commission intently, but for most of us, as long as the lights go on and the hydro bills stay stable, everything is okay.

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That changed dramatically last week, because the commission's ruling provided a tipping point in an emotional battle that has been raging for the past few years over power generation in B.C.

Some environmentalists opposed them as projects that would privatize, and dam, wild rivers, but Premier Gordon Campbell's government argued independent power projects, or IPPs, were needed to avert an energy crisis in B.C. and fight global warming.

The commission's ruling made it clear, however, that there is no energy crisis - and that when there are energy shortfalls, such as during droughts or the period of peak demand in December, BC Hydro has a solid backup system in the Burrard Generating Station, an old, mostly idle plant fuelled by natural gas.

The ruling sent a shock wave through the IPP market, especially when Dow Jones reported BC Hydro would likely put its entire clean-energy call on hold.

Even some environmentalists were alarmed, with Merran Smith of ForestEthics declaring the commission was "locking the province into an uncertain future dependent on fossil fuels."

B.C. Citizens for Green Energy called it a "shocking and totally bewildering decision."

The ruling was widely portrayed as one in which the British Columbia Utilities Commission told BC Hydro to fire up dirty, old Burrard in order to keep rates down.

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But that isn't what the commission's decision states.

"The commission is not saying we should run the Burrard plant, or that Burrard is a better source of energy than clean resources," said economist Marvin Shaffer.

What the commission determined is that Burrard is valuable as a backup facility, and that in that role it has the capacity of at least 5,000 gigawatt hours, not the 3,000 GWh estimated by BC Hydro.

By refusing to accept the lower capacity, the commission called into question the need for BC Hydro to purchase backup power from IPPs.

"When you downgrade it to 3,000 as BC Hydro proposed, you do two things. You force yourself to buy power that generally you don't need ... [then]you have to sell that power at a loss," said Mr. Shaffer, who appeared at commission hearings on behalf of a union representing BC Hydro workers.

The downgrade proposed by BC Hydro (which was surprisingly low given that the plant is given a capacity of over 7,000 GWh on the corporation's website) would have kept the clean-energy call alive, and that would have suited Mr. Campbell's agenda of promoting IPPs. But that would have been bad for ratepayers, and it would not have - despite what some environmentalists claim - done much to fight global warming.

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The IPPs would mostly produce power in the spring, when BC Hydro reservoirs are full and the extra generation isn't needed - so it would not have been displacing dirty energy produced in B.C.

Had the British Columbia Utilities Commission not intervened, B.C. would have been damming its wild and scenic rivers, not in a noble fight against global warming, but in order to run air conditioners in California.

IPPs aren't dead in B.C. because of the ruling. BC Hydro can come back to the commission and argue for individual clean-energy purchases on a case-by-case basis. Projects deemed to be in the public interest will be approved. That approach makes a lot of sense, both for the environment and for ratepayers.

"When you step back from it, I find the controversy so funny," Mr. Shaffer said. "It's a logical answer the commission gave."

Logical, yes, but that doesn't make it politically acceptable. The provincial government must now be looking for a way to short-circuit the British Columbia Utilities Commission's decision. Stand by for more shocks.

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About the Author
National correspondent

Mark Hume is a National Correspondent for The Globe and Mail, based in Vancouver, writing news and feature stories on a daily basis about his home province of British Columbia. His weekly column, which often challenges the orthodoxy on environmental issues, appears every Monday. More

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